Added on August 2, 2011 at 03:16 Riga timeThe US House of Representatives
passed the 74-page debt deal bill with 269 to 161 votes. Spending shall be
cut and the debt ceiling raised.

Added on August 1, 2011 at 13:17 Riga timeHere the full text of Barack
Obama's remarks on the possible US debt deal, given on July 31, 2011:

“Good evening. There are still some very
important votes to be taken by members of Congress, but I want to announce
that the leaders of both parties, in both chambers, have reached an
agreement that will reduce the deficit and avoid default -- a default that
would have had a devastating effect on our economy.

The first part of this agreement will cut about $1 trillion in spending over
the next 10 years -- cuts that both parties had agreed to early on in this
process. The result would be the lowest level of annual domestic spending
since Dwight Eisenhower was President -- but at a level that still allows us
to make job-creating investments in things like education and research. We
also made sure that these cuts wouldn’t happen so abruptly that they’d be a
drag on a fragile economy.

Now, I've said from the beginning that the ultimate solution to our deficit
problem must be balanced. Despite what some Republicans have argued, I
believe that we have to ask the wealthiest Americans and biggest
corporations to pay their fair share by giving up tax breaks and special
deductions. Despite what some in my own party have argued, I believe that
we need to make some modest adjustments to programs like Medicare to ensure
that they’re still around for future generations.

That's why the second part of this agreement is so important. It
establishes a bipartisan committee of Congress to report back by November
with a proposal to further reduce the deficit, which will then be put before
the entire Congress for an up or down vote. In this stage, everything will
be on the table. To hold us all accountable for making these reforms, tough
cuts that both parties would find objectionable would automatically go into
effect if we don’t act. And over the next few months, I’ll continue to make
a detailed case to these lawmakers about why I believe a balanced approach
is necessary to finish the job.

Now, is this the deal I would have preferred? No. I believe that we could
have made the tough choices required -- on entitlement reform and tax reform
-- right now, rather than through a special congressional committee
process. But this compromise does make a serious down payment on the
deficit reduction we need, and gives each party a strong incentive to get a
balanced plan done before the end of the year.

Most importantly, it will allow us to avoid default and end the crisis that
Washington imposed on the rest of America. It ensures also that we will not
face this same kind of crisis again in six months, or eight months, or 12
months. And it will begin to lift the cloud of debt and the cloud of
uncertainty that hangs over our economy.

Now, this process has been messy; it’s taken far too long. I've been
concerned about the impact that it has had on business confidence and
consumer confidence and the economy as a whole over the last month.
Nevertheless, ultimately, the leaders of both parties have found their way
toward compromise. And I want to thank them for that.

Most of all, I want to thank the American people. It’s been your voices --
your letters, your emails, your tweets, your phone calls -- that have
compelled Washington to act in the final days. And the American people's
voice is a very, very powerful thing.

We’re not done yet. I want to urge members of both parties to do the right
thing and support this deal with your votes over the next few days. It will
allow us to avoid default. It will allow us to pay our bills. It will
allow us to start reducing our deficit in a responsible way. And it will
allow us to turn to the very important business of doing everything we can
to create jobs, boost wages, and grow this economy faster than it's
currently growing.

That’s what the American people sent us here to do, and that’s what we
should be devoting all of our time to accomplishing in the months ahead.

Thank you very much, everybody.”

The debt compromise
Added on August 1, 2011 at 11:26 Riga timeTime pressure can help, but it is rarely the best
adviser. The two parties have waited too long to come up with a convincing
solution. President Obama said yesterday:
“Now, is this the deal I would have preferred? No.” He added:
“But this compromise does make a serious down payment on the deficit reduction
we need, and gives each party a strong incentive to get a balanced plan done
before the end of the year.”
Until now, there is still no official written version of the possible US
debt compromise available.

Article added on August 1, 2011 at 01:38 Riga time Finally, details of a possible US debt compromise emerge. After
long
talks, Democrats and Republicans have
come to their senses in the last minute, have they?

A final deal has to pass both the Senate and the House and then be signed by
President Obama. Many obstacles still lay ahead.

The deal itself - as presented by several sources - does not sound that
exciting. It does not seem to be radical enough. The United States could
lose its AAA rating.

The first step of the new deal would take immediate effect and raise the
debt ceiling by about $1 trillion while cut spending by a bit more than $1
trillion over a decade.

In a second phase, a newly formed congressional committee composed of six
Democrats and six Republicans would have to recommend until November 2011 at
least additional $1.8 trillion in cuts, including entitlement programs such
as Social Security, Medicare and Medicaid.
Tax increases are not part of the deal. However, the congressional committee
could recommend them.

If the congressional committee failed to produce at least additional $1.5
trillion [corrected on August 2, 2011: sources spoke earlier of $1.8
trillion to find, but the actual deal is $1.5
trillion] in spending cuts, automatic spending cuts of $1.2 trillion would
take effect. At the same time, the debt limit would automatically rise by
$1.2 trillion too.

Social Security, Medicaid and food stamps would be exempt from the automatic
cuts. However, Medicare, payments to doctors and nursing homes as well as
subsidies to insurance companies offering alternative to government-run
Medicare could be cut.

In total, the debt ceiling would be raised by $2.2 trillion, enough for the
Democrats and President Obama to be save until after the 2012 election,
whereas the Republicans would have loved to have 2012 debt debates. Will
this proposal find the approved stamp from the Tea Party as well as enough
moderate Republicans in the House? The looming default may push some to
accept the compromise.